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Think Tank: Generation Z, the Next Big Retail Disruptor

Generation Z, the teens and tweens coming of age today, are not just another Millennial story. Far from it. They are more self-aware, more self-reliant and more driven than the generation they follow. Intuitively innovative, uberproductive, goal-oriented and realistic, they are growing to be savvy consumers. Businesses hoping to connect with them need to understand who they are and how they are about to turn today’s market on its head.

This story first appeared in the August 5, 2015 issue of WWD.

As a strategist, I leverage my background in cultural anthropology to recognize the nuances of human behavior within societal clusters and to understand how small shifts in attitude can lead to big changes for retailers and brands.

My Gen Z “aha” moment came a few years ago as I was examining Millennial attitudes toward retailers’ environmental practices. Research showed that while Millennials did view companies with strong environmental programs more positively, they weren’t likely to pay more for sustainable products or to shop these businesses for this reason alone. But among the younger kids, a different trend unfolded, one that ultimately offers a whole different set of challenges to merchants and marketers.

This cohort was more focused on what they could do to improve the environment versus what was in it for them. This sense of personal ownership, rejection of the status quo and expectation to be part of the solution are evidenced in the achievements of Megan Grassell, who launched her own business after finding only “too sexy” bra options available for her little sister, and 17-year-old Raymond Wang, who won the world’s largest high school science fair for inventing a new way to keep germs from spreading in airplane cabins. With the world of information at their fingertips and a belief that anything is possible, Megan, Raymond and others like them are taking on big business and even bigger societal issues.

To understand what shapes the Gen Z world view, consider their childhood:

Danger: Born after 1997, Gen Z’s lived through the biggest recession since the Thirties. They know only a post-9/11 world — America at war and under threat has been their norm. Raised in the shadow of the Columbine massacre, they’ve witnessed a rise in school violence, publicized mercilessly 24/7. School metal detectors and lockdown drills are common protocol. Bullying has gone online and followed them on their mobile devices. The constant perceived threat of harm has become a defining characteristic for this generation.

Tolerance: Most people in Gen Z can’t remember a time when there wasn’t an African-American president and a woman wasn’t a serious contender. Bullying changed from something society ignored to something that’s being actively discouraged. LGBT acceptance soared, as did marriage equality, which will now be their life norm.

Boundless access: Millennials adapted to the rise of social media and mobile technology, but Gen Z’s were born into it. They are true digital natives, the first to grow up with vast amounts of timely, global information and being instantly socially connected.

Mini adults: Gen Z’s parents are more like stealth fighters than the Millennials’ “helicopter parents.” They monitor their kids’ activity — occasionally zipping in, dropping bombs and redirecting as necessary — but just as quickly zip back out and let them self-direct. Gen Z’s parents have more consultative and transparent relationships with their children and give them more of a voice in household decisions.

It will not be easy to win the hearts and minds of this generation, which is not only self-reliant, ambitious and innovative, but also impatient and quick to discount those who can’t immediately deliver on their needs or who complicate their lives.

Brands not only need to give Gen Z shoppers what they want and how they want it, they also need to intuitively deliver on their evolving needs, allow them to be part of the solution and rapidly develop a relationship of mutual respect.

This will require substantial business and marketing changes. What’s more, companies need to learn to start making such changes more frequently.

Generations are borne from disruption. Today, the very goal of businesses, political groups and social organizations is to disrupt the status quo. In a world of instant global sharing, we are going to see social shifts and changes in attitudes and consumer expectations accelerate. Our generations will become shorter. Radical changes in consumer behavior will become the norm.

The entrepreneurial community has the advantage in this new world, having made a practice of fulfilling the human needs that established companies either can’t meet or don’t recognize. Large companies need to act more like start-ups and provide alternative innovations, not incremental improvements.

Some organizations in the worlds of tech and entertainment are meeting this challenge today. Through a culture of innovation, they have developed a habit of understanding consumers as human beings and learned what drives them to repeatedly provide them products, services and experiences they can’t imagine living without. This human-centric approach is the basis for winning with Gen Z and the generations that will be quick to follow.

To succeed in this increasingly disruptive environment, do what a cultural anthropologist would do: embrace the confusion with constant curiosity. Seek the tensions, gaps and asymmetries — the things that don’t make sense or don’t align. Dive in and understand the drivers of these anomalies from a holistically human perspective without judgment or assumption. This story behind the story holds the clues that can trigger the unexpected insights that lead to breakthrough innovations.

Marcie Merriman is executive director, business strategy and retail innovation at Ernst & Young. She is based in Columbus, Ohio.

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